New Zealand Gazette – 1998 – No. 134

Page 3264

✨ Financial Accounting Policies and Commitments



3264

NEW ZEALAND GAZETTE

No. 134

3.3 Distinction Between Capital and Revenue Expenditure

Capital expenditure is defined as all expenditure on the creation of a new asset and any expenditure which results in a significant improvement to the original function of an existing asset.

Revenue expenditure is defined as expenditure which maintains an asset in working condition, and expenditure incurred in maintaining the service performance and operation of the Company.

3.4 Depreciation

Fixed assets are depreciated on the basis of cost price less estimated residual value over the period of their estimated useful life.

Rates used are:

Buildings - 1% SL - 4% DV
Furniture, Fittings & EDP Equipment - 10% DV - 50% DV
Motor Vehicles - 20% DV - 25% DV
Network Assets - 1% SL - 22% DV

3.5 Receivables

Receivables are stated in their estimated realisable value.

3.6 Income Tax

The income tax expense charged against the profit for the year is the estimated liability in respect of that profit and is calculated after allowance for permanent differences. The Company uses the liability method of accounting for deferred taxation and applies this on a comprehensive basis. Future tax benefits attributable to tax losses or timing differences are only recognised where there is virtual certainty of realisation.

3.7 Work In Progress

The cost of work in progress includes the cost of direct material and direct labour used in putting replacement and new systems in their present location and condition.

3.8 Goods And Services Tax

These accounts have been prepared on a GST exclusive basis with the exception of Sundry Debtors and Creditors which are GST inclusive.

4.0 COMMITMENTS

Operating Lease Commitments are as follows:

                                                31 March 1998     31 March 1997
                                                ($000)          ($000)

Less than one year 53 33
Greater than one year and not later than two years 36 26
Later than two years and no later than five years 69 15
Later than five years 2 2



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🏭 Financial Statements for The Power Company Ltd (continued from previous page)

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Financial Statements, Accounting Policies, Depreciation, Commitments, The Power Company Ltd